Except in very exceptional cases, shares in private portfolio companies contain restrictions on transfer, cannot be distributed to LPs, and will be held at the Fund or SPV level pending an exit event.
Publicly Traded Shares:
After a portfolio company goes public or receives public company securities as part of an exit event, the decision to distribute stock in-kind (i.e. as shares) or to liquidate at the fund/SPV level and distribute cash proceeds is made on a case-by-case basis.
Common factors impacting this decision include:
- The tax or other economic value to fund investors of receiving shares in-kind.
- The fund/SPV lead's recommendation as to the best liquidation strategy for the fund.
- The quantity and value of shares being distributed.
- The feasibility of an in-kind distribution based on the exchange and listing type.
When a fund or SPV offers the option to receive shares in-kind, you will receive a notification at the email address associated with the fund/SPV lead’s account to confirm the exit strategy on behalf of the fund/SPV and your election for your consideration of carry, as applicable.
In order to receive shares, you'll need to make an affirmative election and provide information for a brokerage account that is able to receive the shares in the name of the investment account under which you invested.
The average closing market price for the Company’s stock for the three trading days preceding the date the shares are received by the Fund will be the “Distribution Value” used for the purpose of calculating the shares to distribute in-kind to LPs and carry recipients as applicable. Our broker charges a fee per share, whether you elect to receive cash or in-kind shares.
What happens if one of my Portfolio Companies IPO's or receives public company stock in an acquisition?